GAO-04-464R Financial Crimes Investigations 

United States General Accounting Office 

Washington, DC 20548 

February 20, 2004 

The Honorable Thad Cochran 

Chairman 

The Honorable Robert C. Byrd 

Ranking Minority Member 

Subcommittee on Homeland Security 

Committee on Appropriations 

United States Senate 

Subject: Investigations of Terrorist Financing, Money Laundering, and Other 

Financial Crimes 

After the tragic events of September 11, 2001, federal efforts to wage a seamless, 

coordinated campaign against sources of terrorist financing became critically 

important. In May 2003, the Attorney General and the Secretary of Homeland 

Security signed a Memorandum of Agreement (Agreement) concerning terrorist 

financing investigations, which contained a number of provisions designed to resolve 

jurisdictional issues and enhance interagency coordination. The Agreement and its 

related procedures specified that the Federal Bureau of Investigation (FBI) was to 

have the lead role in investigating terrorist financing and that the U.S. Immigration 

and Customs Enforcement (ICE), a component of the Department of Homeland 

Security, was to pursue terrorist financing solely through participation in FBI-led task 

forces, except as expressly approved by the FBI. Specific provisions of the 

Agreement directed the FBI and ICE to, among other things, develop collaborative 

procedures for handling applicable ICE investigations or financial crimes leads that 

have a nexus to terrorism. Another provision required that the FBI and ICE jointly 

report to the Attorney General, the Secretary of Homeland Security, and the Assistant 

to the President for Homeland Security on the status of the implementation of the 

Agreement 4 months from its effective date. 

Shortly after the Memorandum of Agreement was signed, Department of Homeland 

Security component agencies, the U.S. Secret Service and ICE, expressed concern 

that the Agreement could adversely affect their ability to conduct investigations 

involving financial crimes. Thus, Senate Report 108-86 (July 2003)1

 directed that we 

evaluate the Agreement’s impact on the existing authorities of the Secret Service and 

ICE to effectively carry out traditional financial crimes investigations. Our initial 

work showed that the Agreement pertains only to investigations and operations of 

 

1

 Title I of the Senate Appropriations Committee report on the Department of Homeland Security 

Appropriations Bill for 2004. 
 

Page 2 GAO-04-464R Financial Crimes Investigations 

the FBI and ICE and does not impact the investigative authority or operations of the 

Secret Service. Therefore, we are not discussing the Secret Service in this report. In 

accordance with the congressional mandate and as agreed with your offices, this 

report addresses the following questions:

• What is the status of the implementation of the Memorandum of Agreement? 

• How has the Agreement affected the mission or role of ICE regarding 

investigations of financial crimes? 

• What are the potential challenges to the successful implementation of the 

Agreement? 

To address these questions, our work focused on the principal components of the 

Department of Homeland Security and the Department of Justice that are responsible 

for implementing the Agreement and investigating and prosecuting terrorist 

financing—ICE, the FBI and its Joint Terrorism Task Forces, the Terrorist Financing 

Unit of the Counterterrorism Section in Justice’s Criminal Division, and U.S. 

Attorneys Offices. To determine the implementation status of the Agreement and the 

potential challenges to its successful implementation, we contacted headquarters 

officials from these components, and we reviewed available documentation of intraagency and interagency communications on these topics. We obtained additional 

perspectives on the Agreement and its implementation from field officials in three 

major U.S. cities and reviewed related documents. 

Further, to determine how the Agreement has affected the mission or role of ICE, we 

interviewed ICE headquarters and field officials and reviewed applicable laws and 

other documents. We also contacted the Department of the Treasury’s Financial 

Crimes Enforcement Network, officials from three financial regulatory agencies 

(Federal Reserve Board, Office of the Comptroller of the Currency, and the Securities 

and Exchange Commission), two large U.S. banks, and one banking industry 

association.2

 The results of our interviews with federal law enforcement officials in 

the field offices and with the financial community officials may not be representative 

of the views and opinions of others nationwide. We performed our work from 

October 2003 to February 2004 in accordance with generally accepted government 

auditing standards. Enclosure I presents more details about our objectives, scope, 

and methodology. 

Results in Brief

As of February 2004, the FBI and ICE had implemented or taken concrete steps to 

implement most of the key Memorandum of Agreement provisions. For example, the 

agencies had developed collaborative procedures to determine whether applicable 

 

2

 A primary role of the Financial Crimes Enforcement Network is to support terrorist financing 

investigations through the facilitation of information sharing and networking among the law 

enforcement, regulatory, and financial communities. This role includes collecting and disseminating 

financial leads to law enforcement agencies. 
 

Page 3 GAO-04-464R Financial Crimes Investigations 

ICE investigations or financial crimes leads may be related to terrorism or terrorist 

financing—and, if so, determine whether these investigations or leads should 

thereafter be pursued under the auspices of the FBI. The FBI and ICE have not yet 

issued a joint report on the status of the implementation, which was required 4 

months from the effective date of the Agreement. By granting the FBI the lead role in 

investigating terrorist financing, the Agreement has altered ICE’s role in investigating 

terrorism-related financial crimes. However, the Agreement generally has not 

affected the agency’s mission or role in investigating other financial crimes. The FBI 

and ICE have and will continue to confront a number of operational and 

organizational challenges, such as establishing and maintaining effective interagency 

relationships and ensuring that the financial crimes expertise and other investigative 

competencies of both agencies are appropriately and effectively utilized. Continued 

progress in implementing the Agreement depends largely on the FBI’s and ICE’s 

ability to find workable strategies to overcome these challenges. 

Background 

The former U.S. Customs Service, which is now part of ICE, and the FBI both have a 

long history of investigating money laundering and other financial crimes.3

 In 

response to the terrorist attacks of September 11, 2001, the Departments of the 

Treasury and Justice both established multi-agency task forces dedicated to 

combating terrorist financing. Treasury established Operation Green Quest, led by 

Customs, to augment existing counterterrorist efforts by targeting current terrorist 

funding sources and identifying possible future sources. In addition to targeting 

individuals and organizations, Operation Green Quest was designed to attack the 

financial systems that may be used by terrorists to raise and move funds, such as 

fraudulent charities and the shipment of bulk currency. In January 2003, Customs 

expanded Operation Green Quest by doubling the personnel commitment to a total of 

approximately 300 agents and analysts nationwide to work solely on terrorist 

financing matters. In March 2003, Customs and Operation Green Quest were 

transferred to ICE, within the Department of Homeland Security. 

On September 13, 2001, the FBI formed a multi-agency task force—which is now 

known as the Terrorist Financing Operations Section (TFOS)—to combat terrorist 

financing. The mission of TFOS has evolved into a broad role to identify, investigate, 

prosecute, disrupt, and dismantle all terrorist-related financial and fundraising 

activities. The FBI also took action to expand the antiterrorist financing focus of its 

Joint Terrorism Task Forces (JTTFs)—teams of local and state law enforcement 

officials, FBI agents, and other federal agents and personnel whose mission is to 

investigate and prevent acts of terrorism.4

 In 2002, the FBI created a national JTTF in 

 

3

 Money laundering is the process used to transform monetary proceeds derived from criminal 

activities into funds and assets that appear to have come from legitimate sources. 

4

 According to the FBI, the first JTTF came into being in 1980, and the total number of task forces has 

nearly doubled since September 11, 2001. Today, there is a JTTF in each of the FBI’s 56 main field 

offices, and additional task forces are located in smaller FBI offices. 
 

Page 4 GAO-04-464R Financial Crimes Investigations 

Washington, D.C., to collect terrorism information and intelligence and funnel it to 

the field JTTFs, various terrorism units within the FBI, and partner agencies. 

Following September 11, representatives of the FBI and Operation Green Quest met 

on several occasions to attempt to delineate antiterrorist financing roles and 

responsibilities. However, such efforts were largely unsuccessful. The resulting lack 

of clearly defined roles and coordination procedures contributed to duplication of 

efforts and disagreements over which agency should lead investigations.5

 To help 

resolve these long-standing jurisdictional issues, in May 2003, the Attorney General 

and the Secretary of Homeland Security signed a Memorandum of Agreement on 

terrorist financing investigations. According to the Agreement, the Department of 

Justice will lead federal law enforcement efforts against terrorist financing.6 The 

Agreement specifies that the FBI is to lead terrorist financing investigations and 

operations, utilizing the intergovernmental and intra-agency national JTTF at FBI 

headquarters and the JTTFs in the field. The Agreement also specifies that, through 

TFOS, the FBI is to provide overall operational command to the national JTTF and 

the field JTTFs. 

The Agreement contains several provisions designed to increase information sharing 

and coordination of terrorist financing investigations. For example, the Agreement 

requires the FBI and ICE to (1) detail appropriate personnel to each other’s agency 

and (2) develop specific collaborative procedures to determine whether applicable 

ICE investigations or financial crimes leads may be related to terrorism or terrorist 

financing. Also, the Agreement required the FBI and ICE to produce a joint written 

report on the status of the implementation of the Agreement 4 months from its 

effective date. Additional details on the Agreement and all of its provisions are 

presented in enclosure II. 

Most Key Memorandum of Agreement Provisions Have Been Implemented

As of February 2004, most of the key Memorandum of Agreement provisions had 

been implemented or were in the process of being implemented (see table 1). For 

example, in accordance with the Agreement, the FBI and ICE have cross-detailed key 

management personnel at the headquarters level, with an ICE manager serving as 

Deputy Section Chief of TFOS and an FBI manager detailed to ICE’s financial crimes 

division. Also, the FBI and ICE have developed collaborative procedures to 

determine whether appropriate ICE money laundering investigations or financial 

crime leads may be related to terrorism or terrorist financing. 

 

5

 See U.S. General Accounting Office, Combating Money Laundering: Opportunities Exist to Improve 

the National Strategy, GAO-03-813 (Washington, D.C.: Sept. 26, 2003). 

6

 According to Justice, the main terrorist financing criminal statute is 18 U.S.C. § 2339B, which gives 

the Attorney General the responsibility for investigating the crime of terrorist financing. 

 
 

Page 5 GAO-04-464R Financial Crimes Investigations 

Table 1: Status of Implementation of Key Memorandum of Agreement Provisions (as of Feb. 2004) 

Agreement provisions Implementation status 

Increase information sharing and coordination (para. 3). 

• Take all reasonable and necessary steps to permit the 

maximum allowable information sharing relating to terrorist 

financing information and intelligence among the members 

of the national JTTF and field JTTFs. 

• Detail appropriate FBI personnel to the financial crimes 

division of ICE. Such detailees are to be provided full and 

timely access to all data developed in ICE’s money 

laundering and financial crimes cases on an ongoing 

basis. 

• According to FBI and ICE officials, the 

implementation of this provision is 

ongoing. For example, the agencies are 

taking steps to ensure that ICE agents 

assigned to field JTTFs have required 

security clearances. 

• In February 2004, the FBI detailed a 

manager to ICE’s financial crimes 

division. Earlier, other FBI staff had been 

detailed to ICE. 

Develop collaborative procedures to implement the Agreement 

(para. 4). 

• By June 30, 2003, develop collaborative procedures to 

determine whether an ICE money laundering or financial 

crime lead or investigation is related to terrorism or 

terrorist financing and to ensure effective deconfliction.

• The FBI and ICE finalized the 

collaborative procedures in July 2003. 

(See enc. II.) 

Detail a Homeland Security employee to be Deputy Section 

Chief of TFOS (para. 5). 

• When the position of Deputy Section Chief of TFOS next 

becomes vacant or by December 1, 2003—whichever 

comes first—the position shall be filled by a Homeland 

Security employee detailed to the FBI. 

• In July 2003, the position of Deputy 

Section Chief of TFOS was filled by a 

Homeland Security employee. ICE has 

maintained staffing at TFOS (or 

predecessor groups) since October 2001. 

Detail ICE personnel to the national JTTF and JTTFs (para. 6). 

• To utilize the expertise and capabilities of ICE in the 

federal campaign against terrorist financing, Homeland 

Security will detail a significant number of appropriate 

personnel to the national JTTF and field JTTFs, and the 

FBI will ensure that the detailees are fully integrated into 

its efforts to combat terrorist financing. 

• In February 2004, ICE officials said that 3 

ICE agents had been assigned to the 

national JTTF and a total of 277 ICE 

agents had been assigned to field 

JTTFs.a

 The officials did not know how 

many of these assignments were made 

after the Agreement was signed. 

 

Report on the implementation status of the Agreement (para. 8). 

• The FBI and ICE shall provide a joint written report to the 

Attorney General, the Secretary of Homeland Security, 

and the Assistant to the President for Homeland Security 

on the status of the implementation of the Agreement 4 

months from the effective date of the Agreement. 

• No report had been issued, as of 

February 20, 2004. 

Source: GAO analysis of the Agreement and the collaborative procedures (see enc. II) and discussions with FBI and ICE 

officials. 

a

According to ICE officials, the total for the field JTTFs does not include ICE agents who will be assigned in consonance with 

vetted cases being transitioned to the JTTFs, nor does it include ICE investigators who participate part time on JTTFs. Also, 

the officials said that 32 of the 277 ICE agents assigned to field JTTFs were former Customs Service agents. The ICE officials

did not know how many of the 32 Customs agents had worked under the former Operation Green Quest. 
 

Page 6 GAO-04-464R Financial Crimes Investigations 

Further, as an integral aspect of the collaborative procedures, ICE created a joint 

vetting unit, in which ICE and FBI personnel—who have full access to ICE and FBI 

databases—are to conduct reviews to determine whether a potential nexus to 

terrorism or terrorist financing exists in applicable ICE investigations or financial 

crimes leads. If so, the matter is to be referred to TFOS, where the FBI Section Chief 

is to provide the ICE Deputy Section Chief with information demonstrating the 

terrorism nexus, as well as the stage and development of the corresponding FBI 

investigation. Then, the Section Chief and the ICE Deputy Section Chief are to 

discuss the elements of the terrorism nexus, ICE’s equity or commitment of resources 

to-date in the investigation, violations being pursued by ICE before the Memorandum 

of Agreement, and the direction of the investigation. After this collaborative 

consultation, the FBI and ICE are to decide (1) whether the ICE investigation will be 

conducted under the auspices of the JTTF and (2) agency roles in pursuing related 

investigations. Specific investigative strategies generally are to be developed at the 

field level by FBI, ICE, and U.S. Attorneys Office personnel. The Terrorist Financing 

Unit of the Counterterrorism Section in Justice’s Criminal Division is involved in 

coordinating and prosecuting matters and cases involving terrorist financing, which 

are investigated by both the FBI and ICE. 

From July to October 2003, the FBI provided a list of individuals, businesses, and 

organizations to the vetting unit that it believed were related to pre-Agreement ICE 

Operation Green Quest investigations. A review of the list by the vetting unit and 

TFOS identified approximately 30 potential crossover subjects. The FBI believed that 

these subjects had ties to terrorism or terrorist financing—and, accordingly, per the 

Agreement’s collaborative procedures—any related ICE investigations should be 

transitioned to JTTFs. According to ICE officials, in late-October, TFOS 

demonstrated that 10 of the approximately 30 subjects had a confirmed nexus to 

terrorism or terrorist financing, and ICE agreed to transition the related ICE 

investigations to JTTFs. Regarding the other subjects, as of February 2004, FBI and 

ICE officials were engaged in discussions to determine appropriate courses of action. 

Moreover, ICE has provided the vetting unit two sets of financial crimes leads to 

determine whether they may be related to terrorism or terrorist financing. 

Specifically, in September 2003, ICE provided the vetting unit a computer disk 

containing more than 7,000 subjects records that were related to all open former 

Operation Green Quest leads in ICE’s financial investigations database. As of 

February 2004, TFOS was in the process of running the approximately 7,000 ICE 

subject records through FBI databases to determine whether the FBI had ongoing 

investigations involving the same subjects. Since the Agreement was signed, ICE has 

provided an additional 11 financial crimes leads to the vetting unit. TFOS has 

determined that none of these 11 leads had a significant connection to an FBI 

terrorism investigation and, therefore, would not be governed by the Agreement and 

ICE could continue to pursue them. More details about the results of the vetting 

process are presented in enclosure III. 

Another Agreement provision—requiring ICE to detail a significant number of 

appropriate personnel to the national JTTF and the JTTFs in the field—is being 

handled on a location-specific, case-by-case basis. In response to our inquiries, FBI 
 

Page 7 GAO-04-464R Financial Crimes Investigations 

and ICE officials said that this provision was not intended to refer to a specific 

number of personnel and certainly was not intended to imply that all former 

Operation Green Quest agents were to be detailed to JTTFs. According to ICE 

officials, as of February 2004, a total of 277 ICE personnel (from various legacy 

agencies) were assigned full time to JTTFs—a total that consisted of 161 former 

Immigration and Naturalization Service agents, 59 Federal Air Marshals, 32 former 

Customs Service agents, and 25 Federal Protective Service agents. ICE officials said 

that this total does not include ICE agents who will be assigned to JTTFs in 

consonance with vetted cases being transitioned to the JTTFs, nor does it include 

ICE investigators who participate part time on JTTFs. 

Further, in response to our inquiries, ICE officials said they could not readily 

determine how many of the 277 ICE personnel (including the 32 former Customs 

Service agents) were assigned to JTTFs after the Agreement became effective or how 

many of these personnel were now working on financial aspects of terrorism 

investigations. The officials also said they could not readily determine how many of 

the 32 former Customs Service agents had financial investigations expertise or had 

worked in the former Operation Green Quest.7

 The officials noted that all former 

Customs Service agents assigned to the JTTFs had received financial investigations 

training. 

Finally, as shown in table 1, the FBI and ICE have not yet produced the required joint 

report on the status of the implementation of the Memorandum of Agreement. ICE 

officials said they provided a draft report to the FBI in January 2004. FBI officials 

said they anticipate that a joint report will be finalized by the end of February 2004. 

The Memorandum of Agreement Generally Has Not Affected ICE’s Mission or 

Role in Investigating Nonterrorism-Related Financial Crimes

By granting the FBI the lead role in investigating terrorist financing, the Agreement 

has altered ICE’s role in investigating terrorism-related financial crimes. However, 

the Agreement generally has not affected the agency’s mission or role in investigating 

other financial crimes. Specifically, the Agreement did not affect ICE’s statutory 

authorities to conduct investigations of money laundering and other traditional 

financial crimes. ICE investigations can still cover the wide range of financial 

systems—including banking systems, money services businesses, bulk cash 

smuggling, trade-based money laundering systems, illicit insurance schemes, and 

illicit charity schemes—that could be exploited by money launderers and other 

criminals. According to ICE headquarters officials, ICE is investigating the same 

types of financial systems as before the Memorandum of Agreement. 

Also, while the Memorandum of Agreement specifies that the FBI has primary 

investigative jurisdiction over confirmed terrorism-related financial crimes, the 

Agreement does not preclude ICE from investigating suspicious financial activities 

 

7

 As mentioned previously, Customs expanded Operation Green Quest in January 2003 by doubling the 

personnel commitment to a total of approximately 300 agents and analysts nationwide to work solely 

on terrorist financing matters. 
 

Page 8 GAO-04-464R Financial Crimes Investigations 

that have a potential (unconfirmed) nexus to terrorism—which was the primary role 

of the former Operation Green Quest. To support investigations with a potential 

nexus to terrorism and other financial crimes investigations, in July 2003, ICE 

launched Operation Cornerstone, a new financial investigative program designed to 

identify and eliminate vulnerabilities in financial systems that could be exploited by 

individuals, criminal organizations, and terrorists. According to ICE headquarters 

officials, ICE will continue to aggressively investigate financial crimes within its 

jurisdiction, regardless of the origin of the targets or the source or destination of the 

money. 

Further, ICE officials at headquarters and the three field locations we visited said the 

Agreement generally has not affected the agency’s relationships with the financial 

community. Through Operation Cornerstone, ICE plans to continue efforts to 

develop working partnerships with financial industry representatives to share 

information and identify and close industrywide security gaps that could be exploited 

by money launderers and other criminal organizations. The three financial regulators 

we contacted (the Federal Reserve Board, the Office of the Comptroller of the 

Currency, and the Securities and Exchange Commission) also said the Agreement has 

not affected their relationships with ICE. The two financial institutions we contacted 

offered similar comments. The banking industry association representative we 

contacted said that it may be too soon to tell how the Agreement has affected ICE’s 

relationships with the financial community. 

According to Financial Crimes Enforcement Network officials, the Memorandum of 

Agreement did not affect their agency’s procedures for collecting and disseminating 

financial leads, except in specific cases where the information was related to terrorist 

financing. The officials explained that after the Agreement was signed, the agency 

sent only those specific cases potentially related to terrorist financing to the FBI and 

no longer to ICE. In August 2003, ICE sent a letter to the Financial Crimes 

Enforcement Network announcing the creation of Operation Cornerstone and 

requesting that all leads be referred to Cornerstone, regardless of any alleged or 

apparent terrorist connection. In its letter, ICE noted that under the former 

Operation Green Quest, most referrals initially characterized as “terrorist-related 

financing” did not ultimately reveal a link to terrorism but were successfully 

investigated by ICE regarding other financial crimes. In its September 2003 response 

to ICE, the Financial Crimes Enforcement Network explained its process for 

referring terrorist-related leads to the FBI—based on its understanding of the 

Agreement—and offered to work with ICE to improve the vetting process if needed. 

In December 2003, the Financial Crimes Enforcement Network’s new Director made 

the decision to provide Operation Cornerstone with the same terrorist financing 

information as provided to the FBI. 

Finally, ICE officials at the three field locations we visited said the Agreement 

generally has not affected their relationships with state and local law enforcement 

agencies. Specifically, at one location, after the Agreement was signed, local law 

enforcement agencies withdrew two agents from Operation Green Quest but 

subsequently replaced them with agents who did not specialize in terrorism matters. 

At a second location, after the Agreement was signed, 8 to 10 state agents stopped 
 

Page 9 GAO-04-464R Financial Crimes Investigations 

working joint investigations with Operation Green Quest but subsequently continued 

to work with ICE on nonterrorism-related financial investigations.8 At a third 

location, state and local law enforcement did not support Operation Green Quest 

before the Agreement was signed. ICE officials at all three locations said the 

Agreement did not affect state and local support on other types of financial crimes 

investigations that were unrelated to terrorism. 

The FBI and ICE Face Many Challenges in Implementing the Memorandum of 

Agreement 

The successful implementation of the Memorandum of Agreement will require the 

FBI and ICE to address many operational and organizational challenges. First, the 

agencies face the task of finding common space for FBI, ICE, and other JTTF 

personnel to work together. Additionally, ICE personnel assigned to JTTFs may 

encounter obstacles to effective information sharing as agents requiring additional 

security clearances complete the time-consuming process for obtaining such 

clearances. At the organizational level, the FBI and ICE confront various challenges 

integrating organizational cultures and effectively coordinating resources. Shifting 

priorities and large-scale reorganizations in these agencies produced a certain 

amount of turmoil and anxiety, which initially was exacerbated by the Agreement, 

particularly for ICE agents, who may have perceived the Agreement as minimizing 

their role in terrorist financing investigations. 

The most effective investigations of terrorist financing will bring to bear all relevant 

resources on the problem. The FBI and ICE face challenges in ensuring that the 

implementation of the Agreement does not create a disincentive for ICE agents to 

initiate or support terrorist financing investigations. Additional challenges involve 

ensuring that the financial crimes expertise and other investigative competencies of 

the FBI and ICE are effectively utilized and that the full range of the agencies’ 

collective authorities—intelligence gathering and analysis as well as law enforcement 

actions, such as executing search warrants and seizing cash and other assets—are 

effectively coordinated. 

Inherently, efforts to meet these challenges will be an ongoing process. Our 

interviews with FBI and ICE officials at headquarters and three field locations 

indicated that long-standing jurisdictional and operational disputes regarding 

terrorist financing investigations may have strained interagency relationships to some 

degree and could pose an obstacle in fully integrating investigative efforts. In 

addition, some of the ICE field officials we contacted had concerns about 

permanently detailing financial agents to JTTFs, partly because the officials were 

reluctant to have ICE agents supervised by FBI personnel. Further, FBI and ICE 

headquarters generally were not issuing joint communications to their field offices. 

For instance, the agencies had not issued joint guidance to all their supervisory 

agents regarding implementation of the Agreement. Rather, the agencies issued 

separate memorandums. Similarly, the agencies distributed separate memorandums 

 

8

 According to ICE officials, the 8 to 10 state agents were not detailed to Operation Green Quest but 

worked joint investigations with ICE on an ad hoc, as-needed basis. 
 

Page 10 GAO-04-464R Financial Crimes Investigations 

to their field offices regarding the transition of certain ICE investigations to JTTFs. 

While the separate memorandums generally addressed the same issues, these 

communications varied in the specificity of the agencies’ respective roles in pursuing 

the investigations. In summary, these examples indicate that establishing and 

maintaining effective interagency relationships will be a key determinant of 

continued progress in implementing the Agreement and achieving its ultimate goal. 

Concluding Observations 

The Memorandum of Agreement represents a partnering commitment by the FBI and 

ICE to wage a seamless, coordinated campaign against sources of terrorist financing. 

In the 9 months since the Agreement was signed, progress has been made. Continued 

progress will depend largely on the ability of the agencies to establish and maintain 

effective interagency relationships and meet various other operational and 

organizational challenges. 

Agency Comments 

We provided a draft of this report for review and comment to Justice, Homeland 

Security, and Treasury. The three departments did not comment on the overall 

substance of the draft report. We received responses from three Justice components 

(Criminal Division, FBI, and Executive Office for U.S. Attorneys), Homeland 

Security’s ICE, and Treasury’s Financial Crimes Enforcement Network. Four of the 

five respondents provided technical comments and clarifications, which have been 

incorporated in this report where appropriate. The fifth respondent, the Executive 

Office for U.S. Attorneys, had no comments. Also, we provided a draft of the 

applicable sections of this report for review and comment to the three federal 

financial regulatory agencies we contacted. The Federal Reserve Board said the draft 

sections accurately reflected the agency’s position vis-à-vis ICE. A representative 

from the Office of the Comptroller of the Currency said he had no objection to the 

draft language. And, the Securities and Exchange Commission had no comments. 

-- -- -- -- -- 

We are providing copies of this report to the Attorney General and the Secretary of 

Homeland Security. We also will make copies available to others on request. 

If you have any questions about this report, please contact me at (202) 512-8777 or 

Danny R. Burton, Assistant Director, or Eric Erdman, Senior Analyst, at (214) 777-

5600. Other key contributors to this report were Alison Heafitz, Allison Abrams, 

Barbara Keller, and Kathryn Young. 

Richard M. Stana 

Director, Homeland Security and Justice Issues 

Enclosures – 3 
Enclosure I 

 

Page 11 GAO-04-464R Financial Crimes Investigations 

Objectives, Scope, and Methodology 

Objectives

In May 2003, the Attorney General and the Secretary of Homeland Security signed a 

Memorandum of Agreement (Agreement) concerning terrorist financing 

investigations to help resolve jurisdictional issues and enhance interagency 

coordination. Regarding the Agreement, Senate Report 108-86 (July 2003)9

 contained 

the following directive: 

The Committee [on Appropriations] is concerned that the recent Memorandum of Agreement 

(MOA) between the Department of Homeland Security and the Department of Justice 

regarding investigations of terrorist financing will adversely affect the ability of the United 

States Secret Service (USSS) and the Bureau of Immigration and Customs Enforcement 

(BICE) to effectively carry out traditional financial crimes investigations. The Committee 

expects the General Accounting Office (GAO) to provide the Committee ... an evaluation of 

the MOA’s impact on existing authorities of the USSS and BICE to effectively carry out 

financial crimes investigations, including the MOA’s impact on the financial community and 

State and local cooperation. 

Our work indicated that the Agreement does not apply to the Secret Service. 

Therefore, we did not focus on the Secret Service in our evaluation. Rather, in 

accordance with the congressional mandate—and as agreed with the offices of the 

Chairman and the Ranking Minority Member, Subcommittee on Homeland Security, 

Senate Committee on Appropriations—we addressed the following questions in 

reference to the progress of the U.S. Immigration and Customs Enforcement (ICE) 

and the Federal Bureau of Investigation (FBI) in implementing the Agreement: 

• What is the status of the implementation of the Memorandum of Agreement? 

• How has the Agreement affected the mission or role of ICE regarding 

investigations of financial crimes? 

• What are the potential challenges to the successful implementation of the 

Agreement? 

Scope and Methodology

To address these questions, our work focused on the federal entities primarily 

responsible for investigating and prosecuting terrorist financing and implementing 

the Memorandum of Agreement. Within the Department of Homeland Security 

(DHS), we focused principally on ICE (the component that is comprised of agents 

from the legacy U.S. Customs Service). Within the Department of Justice, we focused 

on the FBI—including its Joint Terrorism Task Forces (JTTFs) and Terrorist 

 

9

Title I of the Senate Appropriations Committee report on the Department of Homeland Security 

Appropriations Bill for 2004. 
Enclosure I 

 

Page 12 GAO-04-464R Financial Crimes Investigations 

Financing Operations Section (TFOS)—the Terrorist Financing Unit of the Criminal 

Division’s Counterterrorism Section, and U.S. Attorneys Offices. 

Status of the Implementation of the Memorandum of Agreement 

Preliminarily, we reviewed the Agreement to obtain an understanding of its various 

provisions. Also, we contacted headquarters officials from ICE, the FBI, and the 

Executive Office for U.S. Attorneys to discuss the implementation status of the 

Agreement and to identify and review applicable procedures or other guidance for 

implementing the Agreement. To obtain additional perspectives on the status of 

Agreement’s implementation, we visited ICE, FBI, and U.S. Attorneys Offices in three 

field locations. Each of the three locations was a major metropolitan area. However, 

due to law enforcement sensitivity of ongoing investigations, the three field locations 

are not disclosed in this report. We queried the field office officials about the 

implementation status of the MOA’s various provisions, and we reviewed available 

documentation of intra-agency and interagency communications on this topic. The 

views and opinions expressed by officials in the field locations may not be 

representative of officials nationwide. 

Effects of the Memorandum of Agreement on the Mission or Role of ICE

To determine how (if at all) the Agreement has affected the mission or role of ICE—

including impact on state and local law enforcement cooperation—we interviewed 

ICE headquarters officials and field officials in the three locations. Further, regarding 

financial community relationships, we contacted 

• the Department of the Treasury’s Financial Crimes Enforcement Network;10

• regulatory officials at the Federal Reserve Board, the Office of the Comptroller of 

the Currency, and the Securities and Exchange Commission; 

• representatives from two large U.S. banks; and 

• a representative from a banking industry association. 

The results of these contacts are not necessarily representative of the entire financial 

community. Generally, based on relationships established in previous work, the 

interviewees were individuals who agreed to talk with us and were accessible within 

the limited time frames of our review. 

 

10 A primary role of the Financial Crimes Enforcement Network is to support terrorist financing 

investigations through the facilitation of information sharing and networking among the law 

enforcement, regulatory, and financial communities. This role includes collecting and disseminating 

financial leads to law enforcement agencies. 
Enclosure I 

 

Page 13 GAO-04-464R Financial Crimes Investigations 

Potential Barriers to the Implementation of the Memorandum of Agreement

To identify potential barriers to the successful implementation of the Agreement, we 

interviewed ICE, FBI, and U.S. Attorneys Office officials at headquarters and the 

three field locations. Also, we reviewed agency memorandums and other 

communications regarding Agreement implementation.
Enclosure II 

 

Page 14 GAO-04-464R Financial Crimes Investigations 

Memorandum of Agreement and Collaborative Procedures 

Concerning Terrorist Financing Investigations 

In May 2003, the Attorney General and the Secretary of Homeland Security signed a 

Memorandum of Agreement (MOA) concerning terrorist financing investigations. 

Consistent with the MOA, in July 2003, the FBI and DHS/ICE agreed on collaborative 

procedures for determining whether appropriate ICE financial crime leads or money 

laundering investigations may be related to terrorism or terrorism financing. 

The following sections of this enclosure provide the details of the MOA and the 

collaborative procedures, respectively. 

Memorandum of Agreement Between the Department of Justice and the 

Department of Homeland Security 

On May 13, 2003, the Attorney General and the Secretary of Homeland Security 

signed a Memorandum of Agreement that consisted of the following 11 paragraphs: 

1. Definitions. For purposes of this agreement: 

(a) “Secretary” means the Secretary of Homeland Security, and his successors, 

on behalf of all covered entities they head, supervise or represent. 

(b) “Attorney General” means the Attorney General of the United States, and his 

successors, on behalf of all covered entities they head, supervise or 

represent. 

(c) “Director” means the Director of the Federal Bureau of Investigation, and 

his successors. 

(d) “Parties” means the signatories to this Agreement and their successors, on 

behalf of all covered entities they head, supervise or represent. 

2. Understanding the importance of waging a seamless, coordinated campaign 

against terrorist sources of financing, the undersigned agree that the Department 

of Justice will, as part of its responsibilities as the lead law enforcement agency 

in combating terrorism, and in accordance with the President’s National Strategy 

for Homeland Security, lead the federal law enforcement effort against terrorist 

financing. The Federal Bureau of Investigation (FBI) will lead terrorist financing 

investigations and operations, utilizing the intergovernmental and intra-agency 

National Joint Terrorism Task Forces (NJTTF) at FBI Headquarters and the Joint 

Terrorism Task Forces (JTTFs) in the field to conduct terrorist financing 

investigations and operations. Through the Terrorist Financing Operations 

Section (TFOS), the FBI will provide overall operational command to the NJTTF 

and the JTTFs. 
Enclosure II 

 

Page 15 GAO-04-464R Financial Crimes Investigations 

3. The Secretary and the Attorney General will ensure that all appropriate 

information and intelligence relating to terrorist financing is shared with 

members of the NJTTF and JTTFs, including Department of Homeland Security 

(DHS) detailees, to the greatest extent permissible by law and applicable 

guidelines, and consistent with the March 3, 2003, Memorandum of 

Understanding Between the Intelligence Community, Federal Law Enforcement 

Agencies, and the Department of Homeland Security Concerning Information 

Sharing. The parties agree to promptly take all reasonable and necessary steps to 

permit the maximum allowable information sharing relating to terrorist financing 

information and intelligence among the members of the NJTTF and the JTTFs. 

To further increase information sharing and coordination, the Attorney General 

and the Director agree to detail appropriate personnel to the financial crimes 

division of the Bureau of Immigration and Customs Enforcement (ICE). The 

Secretary shall ensure that such detailees are provided full and timely access to 

all data developed by ICE’s money laundering and financial crimes cases on an 

ongoing basis. 

4. After June 30, 2003, DHS will pursue terrorist financing investigations and 

operations solely through its participation in the NJTTF, the JTTFs, and TFOS, 

except as expressly approved by TFOS as provided in this paragraph. Both DHS 

and the Department of Justice (DOJ) will, however, continue independently to 

investigate money laundering and other financial crime matters that are 

unrelated to terrorism. DHS will focus its activities on protecting the integrity of 

U.S. financial infrastructures. To determine whether a money laundering or 

financial crime matter is related to terrorism or terrorist financing and to ensure 

effective deconfliction, all appropriate DHS leads relating to money laundering 

and financial crimes will be checked with the FBI. The parties agree to develop, 

as soon as possible but no later than June 30, 2003, specific collaborative 

procedures to enable the Section Chief of TFOS and Deputy Section Chief of 

TFOS detailed from DHS (or, if prior to the appointment of the Deputy Section 

Chief from DHS, the Associate Chief referenced in paragraph 3) to determine 

which leads should be provided to TFOS to enable TFOS to determine whether 

such leads may be related to terrorism or terrorist financing. Such procedures 

will provide for joint and continuous analysis of leads. Beginning on July 1, 2003, 

in any given matter, if TFOS determines that the matter is unrelated to terrorism 

or terrorist financing, the leadership of the investigation regarding the matter 

shall not be governed by this MOA. Determinations by TFOS shall take into 

account the following factors: strength of the terrorism or terrorist financing 

nexus; impact on the investigation of non-terrorism matters; and stage and 

development of the respective investigations. If TFOS, after consultation with 

DHS, determines that the matter is related to terrorism or terrorist financing, the 

investigation and operation of the matter shall be led by the FBI in accordance 

with paragraph 2. In pursuing investigations, TFOS will consider, among other 

things, the following factors: preservation of the government’s flexibility and 

options to pursue investigations of both terrorism and non-terrorism matters; 

maintenance of the continuity of investigative personnel and management where 

appropriate (including the option, at the discretion of TFOS, to allow ICE to 
Enclosure II 

 

Page 16 GAO-04-464R Financial Crimes Investigations 

conduct terrorist financing investigations); and utilization of relevant expertise 

and authorities. 

5. The parties agree that when the position of Deputy Section Chief of the TFOS 

next becomes vacant or by December 1, 2003, whichever comes first, the position 

shall be filled by a DHS employee detailed to the FBI, and shall continue to be 

filled by a DHS employee in the future. The employee will be chosen by mutual 

agreement of the Secretary and the Attorney General. Until such time as the 

position of Deputy Chief is filled by a DHS employee, the parties agree that a 

DHS employee shall be detailed to the FBI in a newly created position of 

“Associate Chief” of TFOS. The employee will be chosen by mutual agreement of 

the Secretary and the Attorney General. 

6. The parties agree that the federal campaign against terrorist financing must 

utilize the significant expertise and capabilities of ICE. To this end, the parities 

will ensure that the appropriate ICE personnel have a significant and active 

presence on the NJTTF at headquarters and the JTTFs in the field. The Secretary 

will detail a significant number of appropriate personnel to the task forces, and 

the Director will ensure that the detailees are fully integrated into the FBI’s 

efforts to combat terrorist financing, both at Headquarters and in the field, and 

are able to assist in the process described in paragraph 4, supra. The Secretary 

will ensure that the performance of DHS agents detailed to the FBI under this 

Agreement is recognized as a critical component of the DHS mission and that 

Customs Service’s pre-existing financial investigative expertise is preserved and 

developed through recruitment, training and retention initiatives. 

7. The Secretary agrees that no later than June 30, 2003, Operation Green Quest 

(OGQ) will no longer exist as a program name. The Secretary agrees to ensure 

that any future DHS initiative or program to investigate crimes affecting the 

integrity and lawful operation of U.S. financial infrastructure will be performed 

through the financial crimes division of ICE. DHS will investigate matters related 

to terrorism and terrorist financing only with the consent of the FBI in 

accordance with this Memorandum of Agreement. 

8. The Attorney General and the Secretary shall direct the Director and the 

Assistant Secretary for ICE to provide a joint written report to the Attorney 

General, the Secretary, and the Assistant to the President for Homeland Security 

on the status of the implementation of this Agreement four months from the 

effective date of this Agreement.11

9. The parties shall immediately pursue implementation of the terms of this 

Agreement. Within ten days of the effective date of this Agreement the parties 

 

11 As indicated in paragraph 10 below, “the terms of this Agreement shall be effective upon the 

signature of all parties.” The Agreement was signed by applicable parties on May 13, 2003. Four 

months later would be mid-September 2003. However, according to ICE officials, the Agreement was 

not fully effective until the collaborative procedures were signed in July 2003. Therefore, the officials 

said the joint report was due in November 2003. 
Enclosure II 

 

Page 17 GAO-04-464R Financial Crimes Investigations 

shall jointly issue guidance to all FBI and ICE supervisory agents regarding this 

Agreement. 

10. Except where otherwise indicated, the terms of this Agreement shall be effective 

upon the signature of all parties. 

11. These provisions are not intended to and do not create any rights, privileges, or 

benefits, substantive or procedural, enforceable by any individual or organization 

against the United States, its departments, agencies, or other entities, its officers 

or employees, or any other person. 

Collaborative Procedures Pertaining to the Memorandum of Agreement 

Consistent with the MOA dated May 13, 2003, the FBI and DHS/ICE jointly agree on 

the following collaborative procedures to determine whether appropriate ICE 

financial crime leads or money-laundering investigations may be related to terrorism 

or terrorism financing.12 Nothing in this document shall supersede the written 

provisions in the aforementioned MOA. The following procedures pertain only to 

information and the operations of DHS/ICE: 

1. DHS/ICE will establish a Joint Vetting Unit (JVU) within the Financial 

Information Analysis Section, which will continue to utilize the existing ICE 

vetting methodology to identify financial leads or investigations with a nexus to 

terrorism or terrorism financing consistent with the MOA. 

2. The JVU will be staffed by DHS/ICE and FBI personnel who will have full access 

to relevant DHS/ICE and FBI databases to conduct reviews to determine whether 

a nexus to terrorism or terrorism financing exists in the appropriate DHS/ICE 

lead information or investigations. The JVU will establish a joint tracking system 

on investigative leads referred to the JVU and provide the assigned FBI personnel 

access to the system. 

3. Throughout the collaborative vetting process, the determination of whether a 

DHS/ICE investigative referral or investigation is related to terrorism or terrorist 

financing shall be governed by the factors delineated in the MOA. 

4. DHS will designate an ICE official to serve as the Deputy Chief of the FBI’s 

TFOS. The Deputy Chief will have a fully integrated role in the evaluation and 

determination of whether a DHS/ICE referral or investigation has a nexus to 

terrorism or terrorism financing. The Deputy Chief and other DHS/ICE personnel 

assigned to TFOS will be provided complete and continuous access to FBI 

databases. 

5. If, after collaborative consultation is made between the TFOS Section Chief and 

the DHS/ICE Deputy Chief, TFOS determines that a lead or investigation has a 

nexus to terrorism or terrorism financing, the matter will be investigated solely 

 

12 Michael Garcia, Assistant Secretary for ICE, signed the collaborative procedures on July 2, 2003. 

Robert Mueller, Director of the FBI, signed the collaborative procedures on July 7, 2003. 
Enclosure II 

 

Page 18 GAO-04-464R Financial Crimes Investigations 

through the NJTTF, JTTF and TFOS, except as expressly approved by TFOS as 

delineated in the MOA. 

6. Beginning on or about July 1, 2003, DHS/ICE and the FBI will begin the joint 

collaborative review within the JVU of pending DHS/ICE terrorist financing 

investigations. The review process to determine nexus to terrorism and 

terrorism financing will be governed by the procedures as outlined in this 

document and as delineated in the MOA. 
Enclosure III 

Page 19 GAO-04-464R Financial Crimes Investigations 

ICE Investigations and Leads Identified as Having a 

Potential Nexus to Terrorism or Terrorist Financing 

This enclosure summarizes the status of the vetting of U.S. Immigration and Customs 

Enforcement (ICE) investigations and leads regarding the following three sources: 

• From July to October 2003, the Federal Bureau of Investigation (FBI) provided a 

list to the joint vetting unit of approximately 30 terrorist financing or terrorist 

subjects it believed had crossover with ICE investigations. 

• In September 2003, the ICE vetting unit provided the FBI’s Terrorist Financing 

Operations Section (TFOS) a computer disk containing more than 7,000 subject 

records. 

• In addition, as of January 2004, the ICE vetting unit had provided 11 leads to TFOS 

to determine whether they may be related to terrorism or terrorist financing. 

FBI Referral of Approximately 30 Investigative Subjects 

 

From July to October 2003, the FBI provided a list to the joint vetting unit of 

approximately 30 terrorist financing or terrorist subjects (including individuals, 

businesses, and other entities) it believed had crossover with ICE investigations. 

According to ICE officials, the FBI was claiming sovereignty over any ICE 

investigation that related to these subjects, claiming these subjects had sufficient ties 

to terrorism or terrorist financing, per Memorandum of Agreement guidelines.13 The 

officials said that, in late-October, TFOS demonstrated that 10 of the approximately 

30 subjects had a confirmed nexus to terrorism or terrorist financing and ICE agreed 

to transition the related ICE investigations to the FBI’s Joint Terrorism Task Forces 

(JTTFs). Regarding the other subjects, as of February 2004, FBI and ICE officials 

were engaged in discussions to determine appropriate courses of action. 

In late-2003, the FBI and ICE sent memorandums to their respective field offices to 

notify them about agreements reached regarding the 10 subjects. In general, the 

memorandums noted that future investigative activities related to these subjects 

would be conducted under the auspices of the JTTFs and that the FBI and ICE would 

make joint collaborative decisions on strategic and operational issues. The 

memorandums also addressed, in different levels of detail, the respective roles of the 

FBI and ICE in pursuing the investigations. 

 

13 According to ICE officials, the approximately 30 subjects were related or linked to about 30 former 

Operation Green Quest leads and about 80 ICE investigations. The officials noted that (1) an ICE 

investigation can consist of multiple, related leads and (2) in some cases, leads may become multiple 

investigations due to location and subject associations. 
Enclosure III 

Page 20 GAO-04-464R Financial Crimes Investigations 

We visited three field locations where ICE investigations had been identified to be 

transitioned to the local JTTF. We found that the status of the transitions and the 

continuing role of ICE varied by location and circumstance. 

• At one location, the investigative and prosecutorial strategy for pursuing the joint 

investigation had recently been developed at the field level by FBI, ICE, and U.S. 

Attorneys Office personnel. ICE had agreed to detail personnel to the local JTTF, 

and ICE and JTTF personnel were jointly working the investigation.14 The JTTF 

also had been supporting the ICE investigation before the Memorandum of 

Agreement. 

• At a second location, the investigative and prosecutorial strategy for pursuing the 

joint investigation had recently been developed at the field level by FBI, ICE, and 

U.S. Attorneys Office personnel. ICE had agreed to support part of the JTTF 

investigation that involved violations within ICE’s jurisdiction. However, ICE 

would not commit personnel to the JTTF, in part because of the distance between 

the ICE and JTTF offices. 

• At a third location, ICE had provided its investigative files to the JTTF and was 

not supporting the investigation. In January 2004, ICE headquarters officials said 

the files were turned over during a period of initial confusion about the role of 

ICE under the Agreement. The officials said that they have asked the ICE field 

office to contact the JTTF to determine if ICE support is needed on the 

investigation. 

ICE Provided TFOS More Than 7,000 Subject Records 

In September 2003, the ICE vetting unit provided TFOS a computer disk containing 

more than 7,000 subject records—including individuals, businesses, and other 

entities—that were related to all open former Operation Green Quest leads in ICE’s 

financial investigations database. According to ICE officials, ICE requested that the 

FBI identify any positive subject record hits in FBI databases, so that ICE field offices 

could be advised of FBI investigative interests or crossover investigations. As of 

February 2004, the FBI had not provided the final disposition to ICE on the results of 

the FBI’s subject record checks. According to an FBI official, TFOS was in the 

process of running the ICE subject records through FBI databases to determine 

whether the FBI had ongoing investigations involving the same subjects. 

ICE Provided TFOS an Additional 11 Leads 

In addition, as of January 2004, the ICE vetting unit had provided 11 leads to TFOS to 

determine whether they may be related to terrorism or terrorist financing. According 

to TFOS, some of the ICE leads were found to have either a nexus to terrorism or 

crossovers with nonterrorism-related FBI investigations. However, TFOS determined 

 

14 At the time of our review, the local JTTF did not have enough space to accommodate the ICE 

personnel. As a result, the joint investigation was being conducted out of the ICE field office, with FBI 

personnel visiting the ICE office two or three times each week. 
Enclosure III 

Page 21 GAO-04-464R Financial Crimes Investigations 

that none of the 11 ICE leads had a significant connection to an FBI terrorism 

investigation. Therefore, the leads would not be governed by the Memorandum of 

Agreement and ICE could continue to pursue them. 

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